The lesson from ING's failed remuneration policy: he who rushes ahead doesn't go far

The Banking Appeals Committee issued a landmark ruling on 13 April 2022. This is the first time that a CEO, a supervisory director and a chairman of a remuneration committee have been reprimanded for violating the Banking Sector Code of Conduct, or for violating their bankers' oath. The immediate reason for the reprimand is the fact that ING's supervisory board proposed in 2018 to increase the remuneration of the then CEO, Hamers, by 50% in one go. This proposal caused such a big social stir that the Supervisory Board was forced to withdraw it a few days after the proposal was published. This event is the immediate reason for the Further Remuneration Measures for Financial Enterprises Act.

In an article recently published in the legal journal Ondernemingsrecht (2023/10/11), I analyse the decision of the Appeals Committee and see if this can be used to derive best practices for supervisory boards. Since over the past few years, there has been a clear trend that shareholders are increasingly critical of the remuneration policy implemented by stock exchange funds and, in addition, the laws and regulations that apply to remuneration policies have been tightened, I believe that it is justified to apply the lesson I have formulated outside the financial sector as well. The core of this lesson is that supervisory boards should try as much as possible to take and maintain control when it comes to the remuneration of directors. I think that by having an ongoing dialogue with key stakeholders about (the application of) the remuneration policy and always taking small steps, the Supervisory Board can avoid being surprised by a negative (social) reaction or disapproving vote at the shareholders' meeting.

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